Perth most expensive city by Xmas

[krisbarry]

Perth property blitzes Sydney

Perth's median house prices are likely to top those of Sydney's by Christmas, making it Australia's most expensive property market.

The median price of a house in Perth grew 5 per cent, to $492,000, in the three months to September, capping off a 39 per cent surge in the past 12 months, while Sydney house prices eased 1 per cent in the same period.

If prices in both cities perform similarly in the three months to December, the median price of a house in Perth will be higher than the median price in Sydney for the first time.

The rise of Perth emerged in research conducted by Australian Property Monitors, which this week provided its house price data to the Reserve Bank.

APM spokesman Michael McNamara said the change was remarkable. "Only three years ago Perth house prices were half that of Sydney," he said.

Whether Perth's rise and Sydney's fall continues will largely depend on next week's interest rate ruling by the Reserve Bank.

Perth property prices slowed in the September quarter to 5 per cent after 13per cent growth in the three months to June.

Commentators are divided about the outlook for the market.

Real Estate Institute of Western Australia president Rob Druitt said property prices were expected to continue to grow next year, although at a slower rate than the 39 per cent recorded in the past 12 months.

"It's unlikely we will see any price reductions because we've still got a booming state economy, we've still got huge population influx into the state and we've still got construction industry at full capacity," he said.

But Perth real estate agent Glenn Davies, principal of Davies Allan Real Estate in the Perth suburb of Cottesloe, said the heated market could be headed for a "dramatic" cooldown. He said many buyers were young investors who had never experienced a property downturn. "These (younger) people don't realise that if we have some sort of hiccup in the resource sector, which is what we're hanging on, it could be dramatic," he said.

BIS Shrapnel property analyst Angie Zigomanis said the Perth market had begun to show a downward trend, with the number of first home buyers in July and August 8 per cent lower than at the same time last year.

 

[krisbarry]

Oh my god...generation X and y better escape Perth and move back to Sydney.

 

[wayneL]

utterly, totally, profoundly, insane!

 

[dubiousinfo]

Booms like this (& the following crash) have happened time & again in different places. I have seen the same thing over the last 30 years in places like Gold Coast, Noosa Heads, Port Douglas, Cairns, Darwin, Alice Springs & Byron Bay.

In all cases it played out amazingly similar, the rises were spectacular & lasted long enough for people to believe it would never end. Then came the crash. In every case the drop in prices happened much faster than the rise & the recovery was painfully slow.

By all means get what you can out of the boom, but remember, selling a property takes a lot longer than selling shares. Better to get out a little early than to hang on too long.

One other thing, after the crash there is always a lot of really cheap luxury cars & boats for sale, fantastic bargains for those cashed up.

 

[zed327]

http://www.kitco.com/ind/charnoc/oct312006.html
Perth property doomsdayers should first read what Neil Charnoc has to say in this commentary. China to build 200 cities comprising of 1 million people each.The amount of raw materials to complete this task is mind bogling. WA is riding high on the commodities boom and shall do for well over the next decade. Gold is set to soar to levels nobody has dreamt of and every two bit gold mine that ever dug up a nugget will start up again causing even more shortages of workers than what this state can cope with. Shortages of housing in mining towns will be extreme to say the least and this will cause property prices to esculate again. In Kalgoorlie you can easily pick up houses for $300k but when gold surges over $1000 US an ounce you'll be lucky to get in under $700k. Most people on this forum are pretty clever and do thier research before buying stocks and i think the same should be done with Perth property. Cheers.

 

[kgee]

Yeah I came over from east about three years ago because I could see Perth was undervalued...unfortunateley should have got in then but decided to put my money in shares instead...with mixed fortune... obviously it would have been better to have a house cause I'd be earning off the banks money as well as my own.
Hopefully I'm ready for the next swing I have my fingers crossed I might see an opportunity back over east...queensland maybe...as I really miss the colour green

 

[juddy]

Darwin is what struck me. More expensive than Melb, Adelaide or Brisbane. Whoah!

With regards to median house price, it is not a good way to measure house price growth especially when you have limited stock as Perth has had in the last year.
Quantitative research methods wouldn't really accept such findings as being even close to accurate when such a small sample is used.

 

[Kauri]

Better hurry, times running out...

In todays West Australian

Market guru predicts hard landing ahead
4th November 2006, 9:30 WST

Make your money in the property market in the next 15 years then get ready for the economy to “go into convulsions”.

 

[Rough_Trade]

The main benefits of living in Perth were-
1. Cheap housing
2. Good weather
3. Great beaches
All we need now is global warming to change our weather patterns & rising sea levels to wipe out our beaches & we're screwed.

 

[nioka]

All we need now is global warming to change our weather patterns & rising sea levels to wipe out our beaches & we're screwed.

Speak for yourself. I have waterfrontage but I have a sloping block with my house 30m above water level. Maybe I wont have to walk so far (at present300m) to get to the water. Bring it on. On a serious note global warming is a problem, why not plant a tree or two this weekend.

 

[wayneL]

The main benefits of living in Perth were-
1. Cheap housing
2. Good weather
3. Great beaches
All we need now is global warming to change our weather patterns & rising sea levels to wipe out our beaches & we're screwed.

The *only* benefits really. There was the relaxed lifestyle in days gone by, but that is now long gone.

In a few months, I will be out of this state for good; it sucks!

 

[barnes]

utterly, totally, profoundly, insane!

There are a lot of cities in the world where prices are moving up a lot faster then in Perth. Moscow is the place where the median price has gone up 96% to this October from October of last year, and there is about 12 million people that live there. From spring of 1999 prices rose 10-12 times in some suburbs. And the lot is bought mostly in cash, 'cause the mortgage system works only for 5% of the purchased housing. This is insane.

 

[Freeballinginawetsuit]

I rent a nice house in one of the better parts of gero, with a sea view, for what amounts to amounts a 2.2% nett yield for the owner.... and that is on last years valuation.

Yep prices have moved up here, but I also know what happens here sans a boom.

I will also be bidding this place "adieu" very shortly. I prefer to live somewhere where conversation occaionally diverts from footy and the value of their F^%$ing house.

lol

 

[Smurf1976]

The big risk I see with WA property is that of the underlying narrow economic base.

It's the same in Tasmania, the NT and many regional centres. A booming economy on the back of a handfull of employers themselves concentrated in even fewer industries.

I'll use Tassie to illustrate the point since I'm more familiar with the acutal businesses involved, but the underlying principle is the same in WA.

If you take out Zinifex, Norske Skog, TEMCO, Comalco, Gunns and the fish farms then that wipes out most of the Tasmania's economic wealth creation. Take out McCain, Simplot, Cadbury, Incat, Mt Lyell, ABM and Goliath and there goes most of the rest apart from (typically low paid) jobs in tourism.

Sure, we have plenty of jobs down here that aren't with these companies. Indeed MOST jobs aren't directly with these companies. But follow the money back up the chain and you'll find that the ultimate source of wealth for most employers, even the likes of lawyers and government, is the major industries.

Zinifex, Norske Skog, TEMCO and Comalco are in turn absolutely tied, both operationally and economically, to the ongoing availability of cheap power from the Hydro. Four companies, responsible for around two thirds of the state's exports and all dependent themselves on ONE company. Eggs in baskets...

Swap the business names for a few key commodities and swap hydro-electriciy for natural gas and that's pretty much the WA situation. Vulnerable when something goes wrong.

Not that I'm blaming anyone for the situation. WA had little chance at a modern economy if not through mining. Likewise Tasmania and hydro-electricity. Both having the problems of a pre-mining / hydro small population, remoteness from external markets and so on. Hence both have pursued the same fundamental development path with only the resources in question and the timing being different. And both have much the same inherent economic vulnerability as an unavoidable consequence.

So am I saying that Perth house prices should be comparable to Hobart? Not necessarily but the notion of Perth prices being higher than Sydney makes about as much sense as 16 year old CEO's running dot.com companies circa late 1999. A product of highly unusual circumstances which by definition are unlikely to endure.

The way I see it, either Perth falls or Sydney is about to boom. Now, the NSW economy is officially in recession based on ANZ stats (as is Tasmania) which makes a boom there seem somewhat unlikely in the immediate future...

 

[It's Snake Pliskin]

I rent a nice house in one of the better parts of gero, with a sea view, for what amounts to amounts a 2.2% nett yield for the owner.... and that is on last years valuation.

Yep prices have moved up here, but I also know what happens here sans a boom.

I will also be bidding this place "adieu" very shortly. I prefer to live somewhere where conversation occaionally diverts from footy and the value of their F^%$ing house.

Wayne, I too am sick of nothing talk like football and whatever money people make

 

[wayneL]

The big risk I see with WA property is that.....

Totally agree. Great post Smurf.

 

[phoenixrising]

The way I see it, either Perth falls or Sydney is about to boom. Now, the NSW economy is officially in recession based on ANZ stats (as is Tasmania) which makes a boom there seem somewhat unlikely in the immediate future...

Agreed, it will be awhile before Sydney booms again, but a few things are happening.

The rental vacancy rate is 1.7%. I saw about 20 people at one inspection on a Friday (not Sat) Investors have been out of the market for 3 years.

A survey reported rents may rise by up to 40% in the next 5 years.

For a technical recession unemployment is low.

I can see Sydney bouncing back in the medium term.

 

[Smurf1976]

According to the ABC news, the ACT has now joined in the great house price slide. Only 1% so far, but that's how falls generally start...

The most significant point however being that if Adelaide, Brisbane, Hobart and Melbourne are going nowhere whilst Sydney and Canberra are falling, and all of them seem likely to be cheaper than Perth by the end of the year, then there's no longer an economic incentive to relocate to Perth for anyone with moderate levels of assets.

It becomes a place either for the rich who simply aren't concerned about hosue prices or those starting out with nothing looking to make a quick $. But once they've made some money, they can buy a house far cheaper practically anywhere other than Perth.

I challenge anyone to convince me that a house in Perth is really worth nearly TWICE as much as a similar house in Adelaide and more than one in Brisbane, Melbourne, Canberra or Hobart. Or any regional centre. What, exactly, does Perth have that none of these other cities has?

Want hot weather? Brisbane is warmer than Perth (official stats).

Want cold weather? Try Hobart or Canberra.

Want it dry? Adelaide, Hobart, Melbourne and Canberra all get less rain than Perth.

Snow? Melbourne and Canberra are by far the closest to snow suitable for skiing.

Nightlife? Melbourne has more capacity in nightclubs, per head of population, than practically anywhere. And there's always Sydney.

Major live shows? Sydney and Melbourne head the list for that one.

Professional sport? Melbourne would seem to be a winner on this one.

Natural environment? Hobart is the obvious winner if you like the bush.

Man-made attractions? Brisbane is by far the closest of the state capitals to the action on the Gold Coast whilst Sydney and Melbourne offer by far the largest city environment with its inherent attractions.

Prestige? It would be hard to argue with Sydney on this one.

Liveable city environment without the traffic jams and pollution? Adelaide and Hobart come immediately to mind for this one.

Wine? Adelaide.

"Clean and Green"? The term was invented in Tasmania.

Actual scarcity of land? Even Hobart is more geographically constrained than Perth. As for Sydney...

Plenty of water? Hobart is the only state capital without an actual shortage.

Cheap electricity? The very underpinning of virtually the entire Tasmanian economic strategy since World War 1 and more recently an approach taken in Victoria and now Queensland. WA's power being amongst the most expensive in the country.

Cheap gas? Perth.

Don't get me wrong on this one, I have nothing against Perth as a city or WA in general. But I just don't see that there is anything other than a speculative boom to justify Perth house prices being the highest in the nation.

No doubt many people like living there just as they like living in Adelaide, Hobart or the middle of nowhere. But that doesn't justify such high prices and it's not at all obvious as to what does.

As for the minerals, Darwin is the city closest to major natural gas production, not perth. Indeed there's an LNG plant in Darwin itself. Adelaide isn't too far from a truly massive mine of world renown. Melbourne is 2 hours drive from the world's largest brown coal deposits, a potential source of liquid fuels which dwarfs the oil in Saudi Arabia.

As I said, there's nothing "wrong" with Perth. Like any city it has it's good points. But I don't follow the argument that land there is so much more valuable than land in Adelaide, Brisbane, Canberra or Melbourne (or soon Sydney). Looks like a bubble to me - perhaps that cheap gas is being used to inflate it...

 

[zed327]

Adelaide? Please explain.

 

[wayneL]

According to the ABC news, the ACT has now joined in the great house price slide. Only 1% so far, but that's how falls generally start...

The most significant point however being that if Adelaide, Brisbane, Hobart and Melbourne are going nowhere whilst Sydney and Canberra are falling, and all of them seem likely to be cheaper than Perth by the end of the year, then there's no longer an economic incentive to relocate to Perth for anyone with moderate levels of assets.

It becomes a place either for the rich who simply aren't concerned about hosue prices or those starting out with nothing looking to make a quick $. But once they've made some money, they can buy a house far cheaper practically anywhere other than Perth.

I challenge anyone to convince me that a house in Perth is really worth nearly TWICE as much as a similar house in Adelaide and more than one in Brisbane, Melbourne, Canberra or Hobart. Or any regional centre. What, exactly, does Perth have that none of these other cities has?

Want hot weather? Brisbane is warmer than Perth (official stats).

Want cold weather? Try Hobart or Canberra.

Want it dry? Adelaide, Hobart, Melbourne and Canberra all get less rain than Perth.

Snow? Melbourne and Canberra are by far the closest to snow suitable for skiing.

Nightlife? Melbourne has more capacity in nightclubs, per head of population, than practically anywhere. And there's always Sydney.

Major live shows? Sydney and Melbourne head the list for that one.

Professional sport? Melbourne would seem to be a winner on this one.

Natural environment? Hobart is the obvious winner if you like the bush.

Man-made attractions? Brisbane is by far the closest of the state capitals to the action on the Gold Coast whilst Sydney and Melbourne offer by far the largest city environment with its inherent attractions.

Prestige? It would be hard to argue with Sydney on this one.

Liveable city environment without the traffic jams and pollution? Adelaide and Hobart come immediately to mind for this one.

Wine? Adelaide.

"Clean and Green"? The term was invented in Tasmania.

Actual scarcity of land? Even Hobart is more geographically constrained than Perth. As for Sydney...

Plenty of water? Hobart is the only state capital without an actual shortage.

Cheap electricity? The very underpinning of virtually the entire Tasmanian economic strategy since World War 1 and more recently an approach taken in Victoria and now Queensland. WA's power being amongst the most expensive in the country.

Cheap gas? Perth.

Don't get me wrong on this one, I have nothing against Perth as a city or WA in general. But I just don't see that there is anything other than a speculative boom to justify Perth house prices being the highest in the nation.

No doubt many people like living there just as they like living in Adelaide, Hobart or the middle of nowhere. But that doesn't justify such high prices and it's not at all obvious as to what does.

As for the minerals, Darwin is the city closest to major natural gas production, not perth. Indeed there's an LNG plant in Darwin itself. Adelaide isn't too far from a truly massive mine of world renown. Melbourne is 2 hours drive from the world's largest brown coal deposits, a potential source of liquid fuels which dwarfs the oil in Saudi Arabia.

As I said, there's nothing "wrong" with Perth. Like any city it has it's good points. But I don't follow the argument that land there is so much more valuable than land in Adelaide, Brisbane, Canberra or Melbourne (or soon Sydney). Looks like a bubble to me - perhaps that cheap gas is being used to inflate it...

Top Notch post. All true.